Monday January 23 2012
A REVIEW on the impact of so-called 'negative-equity mortgages' has been postponed until later this year because so few cases have come up, according to Finance Minister Michael Noonan.
A handful of banks began quietly allowing homeowners to shift their negative equity to a new property in the middle of last year, as first reported by the Irish Independent in September.
The progress of such lending is being carefully monitored by the Central Bank, which was due to assess the pros and cons of the loans by the end of 2011.
In response to a Dail question from Labour's Joanna Tuffy, Mr Noonan said only a "small number" of lenders had told the Central Bank they would consider offering such loans.
"The low level of activity made it difficult to conduct a meaningful review at the end of 2011," he added. "Therefore the proposed review will not take place until later this year."
October's Keane Report into the mortgage crisis alluded to the potential of negative-equity mortgages to help buyers trade down to cheaper properties.
This would lessen the monthly burden of their mortgages, though the 'loan to value' of the new loan would be worse.
The report also cautioned that banks "may want to use this as an opportunity to move people off tracker and reduced-rate mortgages".
"This would not be appropriate as in most cases it will defeat the objective of someone trading down to a more affordable mortgage," the report added.
Mr Noonan also used his response to once again rule out "a general scheme to assist mortgage holders in negative equity".
- Laura Noonan
Monday, January 23, 2012
Review of negative-equity mortgages postponed - Independent.ie